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Kimberly Clark Corporation (KMB - Analyst Report) is set to report first quarter 2013 results on April 19. Last quarter it posted a 0.7% positive surprise. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Kimberly Clark’s cost saving initiatives, lower commodity costs, and continued product innovation drove earnings growth in the fourth quarter. The company achieved higher organic sales on the back of volume growth and better pricing. The company is well positioned overseas and has expanded its presence in key emerging markets through the K-C International segment in the quarter. Kimberly Clark’s restructuring and cost savings initiatives helped reduce costs, which was reflected in the company’s higher operating profit in the fourth quarter of 2012. However, increased marketing and interest expenses and higher manufacturing costs dented profits.

Overall, we are encouraged by the company’s leadership position in several categories including diapers, paper goods, health care and female personal care. Kimberly Clark’s latest acquisition of the anesthesia business of Texas-based Life-Tech, Inc in early-April helped the company to acquire a leading position in the pain pump market.

Earnings Whispers?

Our proven model does not conclusively show that Kimberly Clark is likely to beat earnings this quarter. That is because a stock needs to have both a positive earnings Expected Surprise Prediction (ESP) (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, #2 or #3 for this to happen. That is not the case here as shown below.

Negative Zacks ESP: The Most Accurate estimate stands at $1.32 while the Zacks Consensus Estimate is higher at $1.34. That is a difference of -1.49%.

Zacks Rank #3 (Hold): Kimberly Clark’s Zacks Rank #3 (Hold) lowers the predictive power of ESP because the Zacks Rank #3 when combined with a negative ESP makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies in the consumer staples sector that can be considered as our model shows they have the right combination of elements to post an earnings beat this quarter:

Flower Foods Inc (FLO - Snapshot Report), Earnings ESP of +7.50% and Zacks Rank #1 (Strong Buy).

The Hillshire Brands Co. , Earnings ESP of +18.75% and Zacks Rank #2 (Buy).

Molson Coors Brewing Co. (TAP - Analyst Report), Earnings ESP of +2.86% and Zacks Rank #3 (Hold).
 

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